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College » BA » News Archive » Feature

Tackling Corporate Governance in the Capital of China

01/30/2007

Corporate governance – whether in the United States or internationally – is a sensitive topic at best.  At a recent forum in China sponsored by the Illinois Global Business Initiative, business professionals, government leaders and faculty tackled corporate governance as a conference topic in a first of its kind event.  

Held at Tsinghua University in Beijing, China in January, the multi-disciplinary conference examined the many issues surrounding  corporate governance, including the competitive advantage that good governance can offer firms, said Joseph Cheng, a professor and Illinois Global Business Initiative Director in the Department of Business Administration in the College of Business at the University of Illinois.

Corporate governance is a multi-faceted subject and deals with issues of accountability and fiduciary duty, advocating the implementation of guidelines and mechanisms to ensure good behavior and protect shareholders. Speakers at the forum used case study presentations and Q&A sessions to reinforce to the more than 80 senior executive participants that good corporate governance is good business.

In a case study example, Cheng shared details of how Infosys,  a software company in India, traditionally a “backwater of corporate governance practices,” started adopting good corporate governance practices far in advance of its public listing resulting in global visibility of the company,  enhanced corporate reputation, and the ability to compete worldwide for talented workers and high-end customers .

“On a global scale,  good corporate governance will also lead to a more efficient use of scarce resources as firms can  now allocate their resources to more productive use, instead of safeguarding opportunistic behaviors due to bad corporate governance practices,” Cheng said  “And, at the highest level, corporate governance is a  frame of mind that leads employees to do the right thing and to protect the interests of resource providers – shareholders and other stakeholders – as well as the integrity of the firm and its business.”

The conference was organized jointly by the Illinois Global Business Initiative of the Department of Business Administration, the State of Illinois Far East Office, CEOCIO-China (the leading business magazine in China), and two research centers from the School of Economics and Management at China’s Tsinghua University. Funding was provided by five corporate sponsors (Caterpillar, Ernst & Young, Grant Thornton, Palgrave Macmillan, and Societe Generale).  The Illinois Brian and Sophie Leung lectureship and two other College units, the Center for International Business Education and Research, and the Academy for Entrepreneurial Leadership, provided additional sponsorships.  Huseyin Leblebici, head of the Department of Business Administration, attended the conference and also gave a presentation on “Corporate Governance and Enterprise Performance.”

The Illinios Global Business Initiative was established in the fall of 2006 to provide academic leadership in studying pressing global business issues – like corporate governance – that have both scholarly and practical significance. The Initiative is supported by a multi-disciplinary group of faculty within the department and is just one example of how the College is playing a leading role in developing ideas that shape global business management.

Cheng noted that word of the successful conference is spreading, and that the Illinios Global Business Initiative has received invitations from other top universities in China to organize similar corporate governance events. Organizers are planning a follow-up conference tour in May that would focus on Sarbanes-Oxley legislation, featuring Larry Ribstein, a professor in the College of Law at the University of Illinois, as keynote speaker.  The Illinios Global Business Initiative is also planning other events in Singapore and Brazil for 2008.

A summary of the conference will be featured in an upcoming article in the February issue of CEOCIO-China,   Detailed information about the conference is available from the Illinios Global Business Initiative website:  www.business.uiuc.edu/ba/igbi/ .